The Usefulness of Public Use

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ESSAY

THE USELESSNESS OF PUBLIC USE

Abraham Bell* and Gideon Parchomovsky**

The Supreme Court decision ofKelo v. City of New London hasbeen denounced by legal scholars from the entire political spectrum andgiven rise to numerous legislative proposals to reverseKelos deferentialinterpretation of the Public Use Clause of the Fifth Amendment, andinstead, limit the use of eminent domain when taken property is trans-

ferred to private hands.In this Essay, we argue that the criticisms ofKelo are ill conceived

and misguided. They are based on a narrow analysis of eminent do-main that fails to take into account the full panoply of government pow-ers with respect to property. Given that the government can achieve anyland use goals through the powers of regulation and taxation without

paying compensation to the aggrieved property owner, eminent domain isthe government power least pernicious to property owners as it is the onlyone that guarantees them compensation. An important and counterin-tuitive implication of this insight is that the calls to restrict the govern-

ments ability to use eminent domain by narrowly construing public useare going to harm, rather than help, private property owners.

This Essay then poses the intriguing question: Why does the gov-ernment ever choose to pay compensation? To answer this question wedevelop a model of political decisionmaking with respect to land use.Our model enables us to elucidate the political calculus that governs thecompensation decision and to specify the conditions under which politi-cal decisionmakers will elect to pay compensation regardless of the policyinstrument chosen.

INTRODUCTION

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1413I. THE KELO STORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1417A. The Kelo Ruling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1417B. Reactions to Kelo. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1423

II. GOVERNMENT AND PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1426A. The Regulatory Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1427B. The Taxing Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1431C. Interplay Among Government Powers . . . . . . . . . . . . . . . . 1433

1. Landmarking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1434

2. Blight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1435a. Condemnation blight . . . . . . . . . . . . . . . . . . . . . . . . 1435

* Visiting Professor, Fordham University School of Law; Lecturer, Bar Ilan University,Faculty of Law.

** Professor, University of Pennsylvania Law School; Visiting Professor, Bar IlanUniversity, Faculty of Law. This Essay greatly benefited from comments and criticisms byBen Depoorter, Assaf Hamdani, Wendell Pritchett, Lawrence Rosenthal, Peter Siegelman,Bill Treanor, and Thomas Ulen.

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2006] THE USELESSNESS OF PUBLIC USE 1413

b. Blight and Public Use . . . . . . . . . . . . . . . . . . . . . . . . 1437D. The Political Model and State Constitutional

Restrictions on Property Regulation . . . . . . . . . . . . . . . . . . 1439

III. COMPENSATION AND GOVERNMENT MOTIVES . . . . . . . . . . . . . . . . 1440A. A Model of Compensation Decisions . . . . . . . . . . . . . . . . . 1440B. An Expanded Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1444C. The Political Model and the Public Use Clause . . . . . . . 1445D. The Political Model and Efficiency . . . . . . . . . . . . . . . . . . . 1447

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1448

INTRODUCTION

Everyone hates Kelo.In 2005, the Supreme Court upheld the City of New Londons taking

of Susette Kelos private home1 for purposes of economic development.The Courts ruling in Kelo v. City of New London broke no new legalground; it merely affirmed a longstanding rule that a taking evidencesthe constitutionally required public use whenever the state acts withinits police powers. Yet critics reactions were immediate, intense, andharsh.

Libertarians hate Kelo for granting excessive deference to state ac-

tions that impair private property rights. Libertarian critics of the deci-sion argue that the Courts deferential approach to questions of publicuse extends an open invitation to the government to take private prop-erty anytime it believes it has identified a better use (public or private) forit. To libertarians, then, Kelo constitutes a judicial endorsement of mas-sive government intervention in the private property market. In their

view, this intervention extends well beyond the narrow need to supplypublic goods, and permits government to second-guess private ownersautonomy in deciding how to develop their property and when to trans-

fer it.2

Liberals, too, hate Kelo for permitting large corporations to acquirethe property of small owners without their consent and for the imprima-tur it places on state victimization of the poorest property owners.3 Thefacts of Kelo illustrate the first concern; New London took Kelos prop-erty, along with more than a hundred others, in order to assemble landfor the pharmaceutical giant Pfizer.4 For such critics, Kelo represents an

1. There were eight other petitioners, the taking of whose property was upheld in thesame action. Kelo v. City of New London, 125 S. Ct. 2655, 2660 (2005).

2. See infra Part I.B.3. See infra Part I.B.4. Kelo, 125 S. Ct. at 265960. While some traditional liberal media outlets, such as

the New York Times, supported the decision, Editorial, The Limits of Property Rights, N.Y.Times, June 24, 2005, at A22, critics noted that the Timess endorsement of the Kelorulingfollowed on the heels of New Yorks seizure of private land in midtown Manhattan for theconstruction of new corporate headquarters for the newspaper. See, e.g., Steve Cuozzo,Unfit to Print: Times Omits Own Eminent-Domain Tale, N.Y. Post, Jan. 19, 2006, at 31.


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1414 COLUMBIA LAW REVIEW [Vol. 106:1412

affirmation of the infamous Poletown Neighborhood Council v. City of Detroit,5

in which the Michigan Supreme Court upheld the state constitutionalityof Detroits seizure of nearly all private realty in a working-class neighbor-

hood and transfer of the land to General Motors.6

The latter concern iscompounded by a belief that government exercises of eminent domainhave a disparate negative impact on the least well-off. This concern findsempirical support in a study by Patricia Munch Danzon in which shedemonstrated that owners of less valuable properties are systematicallyundercompensated when their properties are taken, while owners ofgreater-value property receive excess compensation.7 Therefore, liberalsfind the broad interpretation of public use extremely unappealing ondistributional grounds.8

Furthermore, some liberal critics tie the distributional concern torace and ethnicity by highlighting the correlation between poverty andmembership in certain minority groups. To them, Keloreaffirms the rul-ing of Berman v. Parker, which found a permissible public use in theseizure of private properties for transfer to private developers as part ofan urban renewal plan.9 Representative John Conyers (D-MI) assailedsuch exercises of the takings power as having been used historically totarget the poor, people of color, and the elderly.10 Likewise, JusticeThomas noted in his Kelo dissent that [o]f all the families displaced byurban renewal from 1949 through 1963, 63 percent of those whose race

was known were nonwhite.11

The Courts ruling in Kelo has also become the lightning rod formore generalized criticism of governmental abuse of eminent domain.Nobel prize laureate Gary Becker, for example, argues that a broad gov-ernment power to take by eminent domain is an anachronism, justifiableonly in the old days when governments did rather little.12 Given short-comings in takings compensation doctrine, Becker argues that the au-

thority to seize property by eminent domain opens the door to inefficientprojects born of corruption and enabled by abusive exercise of govern-

5. 304 N.W.2d 455 (Mich. 1981).

6. Wendell E. Pritchett, The Public Menace of Blight: Urban Renewal and thePrivate Uses of Eminent Domain, 21 Yale L. & Poly Rev. 1, 4849 (2003).

7. Patricia Munch, An Economic Analysis of Eminent Domain, 84 J. Pol. Econ. 473,495 (1976).

8. See infra Part I.B.

9. 348 U.S. 26, 35 (1954).10. 151 Cong. Rec. H5577, H5578 (daily ed. June 30, 2005) (statement of Rep.

Conyers).

11. Kelo v. City of New London, 125 S. Ct. 2655, 268687 (2005) (Thomas, J.,dissenting) (quoting Bernard L. Frieden & Lynne B. Sagalyn, Downtown, Inc.: HowAmerica Rebuilds Cities 28 (1989)).

12. Posting of Gary Becker, On Eminent Domain, to The Becker-Posner Blog, athttp://www.becker-posner-blog.com/archives/2005/06/index.html (June 27, 2005) (onfile with the Columbia Law Review).


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ment powers.13 In Beckers view, Kelorepresents a missed opportunity tocut back on the governments takings power.

Kelo has even come under attack from communitarians such as

Amitai Etzioni. Despite his general belief that individual rights havebeen unduly expanded, often at the cost of the common good, Etzionisingled Kelo out as the case that open[ed] the floodgates to excessiveseizures without setting adequate limits to secure private property.14

The political response to Kelohas been broad and far reaching. Sev-eral states have already refined their state constitutional standards for em-inent domain to reject Kelo and impose a narrower test of public use,

while others have taken up bills to do the same.15 Both houses of Con-gress have considered, and the House of Representatives has approved,

proposed legislation that would force states to adopt a narrower defini-tion of public use at the penalty of losing federal funds.16 Keloremains apopular punching bag in the media,17 and the decision came up for criti-cism repeatedly in confirmation hearings for the recently appointedChief Justice Roberts and Justice Alito.18

In light of the anti-Keloconsensus, defending the ruling is a dauntingtask. Even Justice Stevens, who authored the decision, has been luke-

warm, and even apologetic, in defending his own handiwork.19

Nevertheless, in this Essay, we argue thatKelowas rightly decided andthat criticisms of the decision are ill conceived and misguided. We showthat any other interpretation of the public use component of takings law

13. Cf. Abraham Bell & Gideon Parchomovsky, Taking Compensation Private, 59Stan. L. Rev. (forthcoming 2006) (manuscript at 1723, on file with the Columbia LawReview) [hereinafter Bell & Parchomovsky, Private] (pointing out flaws in takingscompensation).

14. Amitai Etzioni, States to the Rescue, Natl L.J., Sept. 19, 2005, at 31.15. See infra note 83 and accompanying text.

16. Senate bills include the Private Property Rights Protection Act, S. 1895, 109thCong. (2005); the Private Property Protection Act of 2005, S. 1704, 109th Cong. (2005);and the Protection of Homes, Small Businesses, and Private Property Act of 2005, S. 1313,109th Cong. (2005). The proposed Private Property Rights Protection Act of 2005, H.R.4128, 109th Cong. (2005) passed the House on November 3, 2005 and as of this writing ispending in the Senate. See 151 Cong. Rec. H9561, H956162 (daily ed. Nov. 3, 2005).The bill would prevent the exercise of the power of eminent domain for economicdevelopment by the federal government and such state and local governments as receivefederal funds, subject to a number of exceptions such as seizure for purposes of conveyingthe property to public ownership or for use by a public utility. H.R. 4128 2(a), 3,8(1)(A)(G).

17. See Gideon Kanner, The Public Use Clause: Constitutional Mandate orHortatory Fluff?, 33 Pepp. L. Rev. 335, 345 n.55 (2006) (collecting sampling of thevigorous public reactions).

18. See, e.g., 152 Cong. Rec. S235, S236 (2006); 152 Cong. Rec. S145, S174, S189(2006); 152 Cong. Rec. S35, S57 (2006); 151 Cong. Rec. S10,631, S10,633 (2005); 151Cong. Rec. S10,529, S10,546, S10,553, S10,565 (2005); 151 Cong. Rec. S10,481, S10,501(2005).

19. Linda Greenhouse, Justice Weighs Desire v. Duty (Duty Prevails), N.Y. Times, Aug.25, 2005, at A1.


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would be forced to use its nontakings powers to accomplish any property-related missions.

Only a comprehensive approach that accounts for all the powers the

government has over private property can yield a coherent takings policy.Unfortunately, with the outstanding exception of Richard Epsteins Tak-ings,20 such comprehensive accounts are rarely to be found in the schol-arly literature on takings. Like Epstein, we argue that one cannot divorcemost kinds of property regulations from a takings paradigm; by contrast

with Epstein, we propose an instrumental model of takings compensationthat commits to no particular view of the permissible role of government.

Nonetheless, our framework rules out a strict or narrow public userequirement; a stringent public use prong of takings law undermines the

ability of the government to utilize what may be the most efficient of itspowers over private property while leaving owners open to many uncom-pensated indirect takings. Indeed, we argue thatKelo and its predeces-sors sensibly made the public use requirement identical to the limitationson other government powers over property.

The remainder of this Essay unfolds in three parts. In Part I, wereview the Kelo decisions and the harsh reactions they engendered. InPart II, we take a step back and discuss the full panoply of governmentpowers affecting property, placing the power of eminent domain within

the proper context. Here, we show that criticisms of one or another ofthe elements of eminent domain law in isolation miss the point. Indeed,by examining the interplay between the various government powers, wedemonstrate that the government may always achieve any property regu-lation or seizure through a variety of government powers, with or withoutcompensation. Thus, barring eminent domain for some purposes simplyleads the government to use another power to the same effect. This leadsin Part III to an examination of the considerations leading the govern-ment to use one or another of its powers. We offer a comprehensive

framework for analyzing the government decision of which power to useand when to pay compensation. We show that, perversely, a strict inter-pretation of the public use prong of takings law leads to an erosion ofprivate property rights by enhancing the relative attractiveness of uncom-pensated seizures, while leaving intact the ability to seize property andpay compensation under other government powers. A short conclusionfollows.

I. THE KELO STORM

A. TheKelo Ruling

Supreme Court decisions in the area of takings often prompt harshpublic reaction and heated public debate. Takings law has become one

20. Richard A. Epstein, Takings: Private Property and the Power of Eminent Domain17980 (1985) [hereinafter Epstein, Takings].


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of the primary battlefields for ideological wars among politicians and le-gal academics. Takings law, therefore, is no stranger to controversy. Yet,even in this controversy-ridden realm, the notoriety of the Supreme

Courts decision in the case ofKelo v. City of New London is considered ararity. In its 5-4 decision to uphold New Londons plan to seize title tomultiple private properties for the benefit of a Pfizer-built industrial park,the Supreme Court ruled that the plan did not violate the public useproviso in the Fifth Amendment.21

The decision won instant and near universal condemnation.

As a leading commentator recently noted, Kelogalvanized the pub-lic at large because [it] unified the progressives with the classical liberalsas few issues can.22 The case united, if only for a short while, such un-

likely allies as the Institute for Justice,23 the NAACP,24 Richard Epstein,25and Amitai Etzioni,26 all of whom opposed the planned taking. The casehas similarly spurred a public outcry and a swift political response. Morethan ten state legislatures rushed to introduce legislation that would barthe government from exercising its eminent domain power in circum-stances similar to Kelo.27 Proposed federal legislation to reverse Kelos ef-fects in federally funded projects passed the House of Representatives,and has been introduced in the Senate.28 Keloalso featured prominentlyin Chief Justice Robertss and Justice Alitos confirmation hearings, and

both were repeatedly probed about their opinion on the matter.29

The most astounding feature ofKelo, as even the cases harshest crit-ics agree, is that from a legal standpoint, the ruling broke no newground. The Supreme Courts broad interpretation of the public use re-quirement goes more than five decades back to the case of Berman v.Parker.30 In Berman, the Supreme Court sanctioned an extensive urbanrenewal plan in Washington, D.C. that involved, inter alia, the condemna-

21. Kelo v. City of New London, 125 S. Ct. 2655, 266365 (2005).22. Richard A. Epstein, Kelo: An American Original: Of Grubby Particulars andGrand Principles, 8 Green Bag 2d 355, 357 (2005) [hereinafter Epstein, Kelo].

23. See materials collected at Inst. for Justice, Kelo v. New London, at http://www.ij.org/private_property/connecticut/ (last visited Aug. 24, 2006).

24. Brief of Amici Curiae NAACP et al. in Support of Petitioners, Kelo, 125 S. Ct. 2655(No. 04-108).

25. Brief for the Cato Institute as Amicus Curiae Supporting Petitioners, Kelo, 125 S.Ct. 2655 (No. 04-108).

26. See Etzioni, supra note 14.27. Forty-three of the forty-four states that have gone into session this year have

introduced legislation intended to restrict or prohibit the government from exercising itseminent domain power to spur economic development when doing so primarily benefits aprivate entity. To date, twenty-eight state legislatures have passed bills. See NatlConference of State Legislatures, Eminent Domain, 2006 State Legislation, at http://www.ncsl.org/programs/natres/emindomainleg06.htm (last updated Sept. 12, 2006) (on file with the Columbia Law Review).

28. See supra note 16.29. See supra note 18.30. 348 U.S. 26 (1954).


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tion and transfer of multiple private lots to private developers. Bermanadopted a very broad interpretation of public use, explaining that therequirement is satisfied whenever the government acts within its police

power.31

The Court evinced no concern that many of the propertieswere to be transferred from one set of private hands to another, and itadded that [t]he role of the judiciary in determining whether that poweris being exercised for a public purpose is an extremely narrow one.32

The only relevant distinction between Berman and Kelo is that many(though not all) of the taken properties in Bermanwere blighted or in astate of disrepair.33

Thirty years later, the Supreme Court revisited the issue of public usein Hawaii Housing Authority v. Midkiff.34 Rather than narrowing the scope

ofBerman, the Court chose to reiterate its holding in even broader lan-guage. Midkiff concerned Hawaiis passage of the Land Reform Act of1974an act intended to break the oligopoly of land ownership in thestate. The legislation empowered tenants to force their landlords to re-linquish their fee simple interest in the property and transfer it to thetenants.35 The legislation was attacked for being at odds with the PublicUse Clause in the Fifth Amendment. Importantly, in this case, the af-fected properties were in perfectly good shape. A unanimous SupremeCourt upheld the Hawaii legislation, pronouncing that the Public Use

Clause is coterminous with police power.36Why then was the Kelo decision met with such wide criticism? The

answer is that at the time of the decision many takings scholars and pub-lic figures expected (or hoped) that the Supreme Court would narrowdown the definition of public use. This expectation was based on severalstate court decisions that adopted a restrictive definition of public use.Foremost among those was the 2004 ruling of the Michigan SupremeCourt in County of Wayne v. Hathcock,37 which overturned the broad read-ing of public use in Michigan law adopted twenty-three years earlier in

Poletown Neighborhood Council v. City of Detroit.38 Poletownwas Kelos prede-cessor as the bete noire of takings law.39 More importantly, the two casesshared some salient similar facts.

31. Id. at 32. The Court elucidated that [p]ublic safety, public health, morality,peace and quiet, law and orderthese are some of the more conspicuous examples of thetraditional application of the police power to municipal affairs. Id.

32. Id.33. Id. at 30.

34. 467 U.S. 229 (1984).35. Id. at 23234.36. Id. at 240.37. 684 N.W.2d 765 (Mich. 2004).38. 304 N.W.2d 455 (Mich. 1981).39. Perhaps the best test of notoriety was advanced by Timothy Sandefur who wrote in

reference to Poletown, [a]s an extreme case, Poletown gained the sort of symbolicauthorityand infamyreserved for those few cases recognized by a single name(Marbury, Plessy, Korematsu). Timothy Sandefur, A Gleeful Obituary for Poletown


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In Poletown, the City of Detroit exercised its eminent domain powerto assemble land for a General Motors plant in order to keep the carmanufacturer from locating a new facility in a different state. The plan

was devised in a period of economic recession, particularly in the domes-tic automotive industry.40 A divided Michigan Supreme Court allowedthe City of Detroit to carry out the taking, ruling that the public use provi-sion does not bar government exercises of eminent domain that aim tospur economic development.41

Despite harsh scholarly criticism,42 the Poletown ruling served as animportant reference point for other state courts. Much to the chagrin ofproperty rights champions, a number of state courts followed the rulingin Poletown, permitting wide use of eminent domain for the purpose of

promoting economic development.43 Among these state courts wasConnecticuts Supreme Court, which upheld the taking in Kelo, specifi-cally referencing the Poletownstandard.44 Therefore, it may be said thatthe decision in Poletown blazed the trail that ultimately led to the Su-preme Court ruling in Kelo.

Poletownwas an influential decision for nearly twenty-three years. In2004, however, it underwent a reversal of fortunes when the MichiganSupreme Court issued its decision in Hathcock. The case involved WayneCountys plan to condemn title to private properties in order to pass

them to a group of private developers for the construction of a businessand technology park. Deviating from its past decisions, the MichiganSupreme Court struck down the government plan, and, more impor-tantly, narrowed the definition of public use. Specifically, the court ruledthat the public use requirement permits the government to use its emi-nent domain power to transfer land to private entities in only three setsof circumstances. First, a taking and transfer are permissible where nec-essary to overcome a collective action problem. An example of this wouldbe the construction of a highway or pipeline. Second, the taking and

transfer to private ownership are permitted where the taken property willbe subject to continuous government oversight, such as when the seized

Neighborhood Council v. Detroit, 28 Harv. J.L. & Pub. Poly 651, 665 (2005) (footnotesomitted). Kelo has already won the dubious honor of being in this group.

40. See Jeanie Wylie, Poletown: Community Betrayed 2940 (1989) (offeringanticorporatist account of events leading to decision).

41. Poletown, 304 N.W.2d at 457.42. See, e.g., Epstein, Takings, supra note 20, at 17980; Joseph L. Sax, Some

Thoughts on the Decline of Private Property, 58 Wash. L. Rev. 481, 48990 (1983); IlyaSomin, Overcoming Poletown: County of Wayne v. Hathcock, Economic DevelopmentTakings, and the Future of Public Use, 2004 Mich. St. L. Rev. 1005, 100607 [hereinafterSomin, Overcoming Poletown].

43. According to the count of one commentator, [t]he Poletowncase has been citeddirectly by the courts of nine other states, and the Seventh Circuit. More importantly, theequation of public use with public purpose that underlay that decision was adopted bythe United State [sic] Supreme Court in Hawaii Housing Authority v. Midkiff. Sandefur,supra note 39, at 66465 (internal citations omitted).

44. Kelo v. City of New London, 843 A.2d 500, 527 (Conn. 2004).


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properties will be used for a government-affiliated university campus.Third, a taking and transfer will be permitted where facts of indepen-dent public significance beyond the private recipients interest may jus-

tify the transferfor example, when the government seeks to revive aseverely blighted neighborhood.45 The court unequivocally stated thatthe ruling overturned the broad public use rule established in Poletown.46

Although the ruling in Hathcock had no direct bearing on Kelo, itindicated that a new wind might be blowing in the world of takings. Theoutcome of Hathcock and other state court decisions, and the temporalproximity between the issuance of the Hathcock opinion and the Kelohearing by the United States Supreme Court, gave the property rightscamp hope that, at long last, the Supreme Court would overrule its broad

interpretation of public use. This hope was augmented by some resem-blance between the underlying facts of the two cases.

The Kelocase was brought after the City of New London announcedits plan to condemn multiple private properties in order to assembleenough land to construct a lavish headquarters for the pharmaceuticalgiant Pfizer. The City adopted this plan in the midst of an economicdownturn in order to lure Pfizer to New London.47 A group of fifteenproperty owners challenged the constitutionality of the taking, arguingthat it violated the Public Use Clause. The Supreme Court of Connecti-cut, in a 4-3 decision, affirmed the power of the government to utilizeeminent domain for purposes of economic development.48 The propertyowners turned to the United States Supreme Court for relief.

In a 5-4 decision, the United States Supreme Court upheld the rul-ing of the Connecticut high court. Writing for the majority, JusticeStevens adhered to the Courts expansive interpretation of public use.Based on a careful review of the Supreme Court precedents, JusticeStevens ruled that New Londons proposed taking unquestionably serves

a public purpose and thus satisf[ies] the public use requirement of theFifth Amendment.49 He categorically rejected the petitioners sugges-tion that economic development does not qualify as public use, notingthat this proposition is supported neither by precedent nor by logic.50

He added that [p]romoting economic development is a traditional andlong accepted function of government and that there exists no princi-pled way of distinguishing economic development from the other publicpurposes that we have recognized.51

45. County of Wayne v. Hathcock, 684 N.W.2d 765, 78183 (Mich. 2004) (quotingPoletown, 304 N.W.2d at 480 (Ryan, J., dissenting)).

46. Id. at 787.

47. Kelo, 843 A.2d at 50809.

48. Id. at 520.

49. Kelo v. City of New London, 125 S. Ct. 2655, 2665 (2005).

50. Id. at 266567.

51. Id. at 2665.


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The two dissenting opinions in Kelo were authored by JusticeOConnor and Justice Thomas. Justice OConnor sought to narrow pub-lic use with a strategy similar to that adopted by the Michigan court in

Hathcock. Under her reading, prior Supreme Court decisions identifiedthree possible categories of takings that meet the public use requirement.The first consists of transfers of private property to public ownershipsuch as for a road, a hospital, or a military base.52 The second is com-prised of transfers of private property to private parties, often commoncarriers, who make the property available for the publics usesuch as

with a railroad, a public utility, or a stadium.53 The third category coverstakings necessary to meet certain exigencies . . . even if the property isdestined for subsequent private use.54 Per Justice OConnor, Berman

and Midkifffall under this last category because both involved takings ofproperty being put to pretakings harmful use.55 Justice OConnor ar-gued that the majoritys willingness to recognize public use, even whenthe properties taken are notharmful, eliminates any distinction betweenprivate and public use of propertyand thereby effectively [deletes] the

words for public use from the Takings Clause of the FifthAmendment.56

The second dissenting opinion, penned by Justice Thomas, took amore direct approach. Unlike Justice OConnor, Justice Thomas did not

dispute the majoritys interpretation of prior cases. Rather, he opinedthat the prior cases and the majoritys opinion were all misguided. Ac-cordingly, he characterized the majority opinion as the latest in a stringof our cases construing the Public Use Clause to be a virtual nullity, with-out the slightest nod to its original meaning.57 In his view, the PublicUse Clause constitutes a meaningful limit on the governments eminentdomain power.58 Correctly understood, the Clause allows the govern-ment to take property only if the government owns, or the public has alegal right to use [it], and prohibits tak[ing] property from A. and

giv[ing] it to B.59Although the Supreme Courts ruling in Kelopermitted New London

to proceed with the taking, ultimately, the City declined to take theproperties. Instead, more than a year after the decision, the City privatelynegotiated an arrangement with Kelo and the other holdout propertyowners.60 This result was due in great part to the overwhelmingly nega-

52. Id. at 2673 (OConnor, J., dissenting).53. Id.54. Id.55. Id. at 2675.56. Id. at 2671.57. Id. at 2678 (Thomas, J., dissenting).58. Id.59. Id. at 267980 (quoting Calder v. Bull, 3 U.S. (3 Dall.) 386, 388 (1798)).60. See Elizabeth Mehren, Eminent Domain Plaintiff Will Keep Her House, L.A.

Times, July 1, 2006, at A15; William Yardley, After Eminent Domain Victory, DisputedProject Goes Nowhere, N.Y. Times, Nov. 21, 2005, at A1.


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tive public and political response to the decision. It is to this responsethat we now turn.

B. Reactions to KeloFew takings cases sparked as harsh a reaction as did Kelo. The deci-

sion attracted criticism from commentators of diverse, and often conflict-ing, political persuasions. Virtually all commentators found the rulingdisconcerting, albeit for different reasons. Kelo also sparked a politicalmaelstrom.

As one might expect, libertarians excoriated the ruling in Kelo. Tolibertarians, Keloprovided further proof of the perils of faction and rent-seeking that only a strong system of property rights can effectively re-sist.61 In this sentiment, the libertarians echoed a sense shared by manylaypeople about the sanctity of private property. As Richard Epstein, theleading scholar on takings law, wrote, [f]or most people, the key ques-tion was whether a mans home is his castle, for which the nave answer is

yes, except when property is used for traditional public purposes such asroads and parks.62 The facts ofKelowere particularly disturbing for lib-ertarians, as they seemed to indicate that the petitioners property wasdesignated for taking not for the industrial project, but rather without

any sensible reason at all.

63

Libertarians had hoped that the Supreme Court would intervene byreinvigorating the Public Use Clause. They believed that a stricter publicuse requirement would hamper the ability of the government to engagein redistribution of property and thereby cut back on the influence of

various lobbyists and interest groups. The Courts refusal to narrow downthe interpretation of public use dashed the hopes of the libertariancamp. Worse yet, in their reading, the Courts adherence to the broadconstruction under the specific facts ofKelo constituted an invitation to

the government to trample private property rights in a broad range ofcircumstances and usurp the owners power to make decisions about thefuture of the property.

The liberal case againstKelo is predicated on a very different set ofconcerns. In the American political context, liberals do not oppose, inprinciple, government intervention in the private property market; nordo they object to any redistribution of wealth by the government from the

well-to-do to the poor. The problem liberals perceive with Kelo is that itsanctioned the wrong kind of wealth redistribution: from the poor to the

richfrom small homeowners like Susette Kelo and her fellow petition-

61. Epstein, Kelo, supra note 22, at 357; accord Ilya Somin, Controlling the GraspingHand: Economic Development Takings After Kelo 1 (George Mason Univ. Law & Econ.Research Paper Series, Paper No. 06-01, 2005), available at http://ssrn.com/abstract_id=874865 (on file with the Columbia Law Review) ([C]ourts should forbid most if not all usesof the economic development rationale . . . .).

62. Epstein, Kelo, supra note 22, at 356.63. Id.


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ers to large corporations like Pfizer. As the NAACP stated in the amicusbrief it filed on behalf of the petitioners: Elimination of the require-ment that any taking be for a true public use will disproportionately harm

racial and ethnic minorities, the elderly, and the economicallyunderprivileged.64

The two dissenting opinions in this case seized on the very samepoint. Justice OConnors dissent focused on the effect of the ruling onthe poor, while Justice Thomass dissent highlighted the disparate impactof the decision on minority racial groups. In discussing the future effectsof the majority opinion, Justice OConnor wrote:

Any property may now be taken for the benefit of another pri-vate party, but the fallout from this decision will not be random.

The beneficiaries are likely to be those citizens with dispropor-tionate influence and power in the political process, includinglarge corporations and development firms. As for the victims,the government now has license to transfer property from those

with fewer resources to those with more. The Founders cannothave intended this perverse result.65

Justice Thomas concluded his dissent by reviewing the effect of pasttakings on minority owners. He pointed out that [o]ver 97 percent ofthe individuals forcibly removed from their homes by the slum-clear-

ance project upheld by this Court in Bermanwere black.66

He furthernoted that [u]rban renewal projects have long been associated with thedisplacement of blacks; [i]n cities across the country, urban renewalcame to be known as Negro removal.67

These ominous predictions are supported to some degree by empiri-cal data. In a careful study of the takings in Chicago, Patricia MunchDanzon found that owners of expensive lots are compensated at abovemarket value, while owners of inexpensive properties are systematicallyundercompensated.68 To the extent that there is correlation between lot

value and wealth, the exercise of eminent domain benefits the affluentand hurts the poor.

Communitarian thinkers also found fault with Kelo. Communitari-ans generally oppose strong private property rights because of their dele-terious effects on common resources. In this case, however, they thoughtthat the Supreme Court went too far in the other direction, abdicating itsresponsibility to protect private property.69 Large-scale takings for eco-nomic development pose a clear threat to existing communities and may

64. Brief of Amici Curiae NAACP et al. in Support of Petitioners, supra note 24, at 3.

65. Kelo v. City of New London, 125 S. Ct. 2655, 2677 (2005) (OConnor, J.,dissenting).

66. Id. at 2687 (Thomas, J., dissenting).

67. Id. (quoting Pritchett, supra note 6, at 47).

68. Munch, supra note 7, at 495.

69. See, e.g., Etzioni, supra note 14 (lamenting fact that individual rights have beenunduly expanded, often at the cost of the common good).


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often cause them to unravel.70 The case ofPoletown illustrates this dan-ger. There, a vibrant ethnic community was effaced in order to makepossible the construction of G.M.s plant.71 Likewise, in Berman, multiple

communities had to give way to allow the urban redevelopment project togo forward.72

Some economists also expressed dissatisfaction with the ruling. Tothem, Kelo represents a missed opportunity to scale back the scope ofeminent domain. Gary Becker, for example, questioned the wisdom ofretaining the power of eminent domain in this day and age. In his view,

we could tolerate this power in the past because it was used sparsely andinfrequently. Today, when government resorts to this power regularly,the harms it generates far outweigh its benefits.73 Echoing to a large de-

gree the libertarian concerns, some economists cautioned that the exten-sive use of eminent domain leads to inefficient government projects,breeds corruption, and erodes private property rights.74

Most importantly, politicians, both on the federal and state levels,have heeded the criticisms of the ruling and the public outcry that fol-lowed it and rushed to introduce various bills aimed at restricting thegovernments power to use eminent domain to spur economic develop-ment. Within three weeks of the ruling, Senator John Cornyn (R-TX)proposed legislation that would construe the Public Use Clause narrowly,

so as to bar the use of eminent domain in order to achieve economicdevelopment.75 Similar bills were introduced in the House ofRepresentatives by Dennis Rehberg (R-MT),76 Phil Gingrey (R-GA),77

Maxine Waters (D-CA),78 Henry Bonilla (R-TX),79 Joel Hefley (R-CO),80

and James Sensenbrenner (R-WI) together with ninety-seven cospon-

70. See Gideon Parchomovsky & Peter Siegelman, Selling Mayberry: Communitiesand Individuals in Law and Economics, 92 Cal. L. Rev. 75, 13342 (2004) (analyzingimplications of communities on design of takings law); Margaret Jane Radin, Market-

Inalienability, 100 Harv. L. Rev. 1849, 1878 (1987) (arguing that economic analysis couldtake into account not only the monetary costs to landlords and would-be tenants, but alsothe decline in well-being of tenants who are forced to lose their homes, [and] break uptheir communities).

71. See Somin, Overcoming Poletown, supra note 42, at 1006.

72. See Pritchett, supra note 6, at 16, 3747 (summarizing Berman v. Parker, 348U.S. 26 (1954)).

73. See Posting of Gary Becker, supra note 12 (discussing possible harms resultingfrom government corruption and abuse of eminent domain).

74. See id. (opining that in modern era when government [sic] at all levels do so

much that the temptation is irresistible to use eminent domain condemnation proceedingsto hasten and cheapen their accumulation of property for various projects, regardless of aproject[]s merits, it may be desirable to do away with power of eminent domain).

75. S. 1313, 109th Cong. (2005).

76. H.R. 3083, 109th Cong. (2005).

77. H.R. 3087, 109th Cong. (2005).78. H.R. 3315, 109th Cong. (2005).79. H.R. 3405, 109th Cong. (2005).80. H.R. 3631, 109th Cong. (2005).


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sors,81 and in the Senate by John Ensign (R-NV).82 On the state level,nearly every state has considered, or will consider this year, legislationseeking to restrict or prohibit the government from exercising its emi-

nent domain power to spur economic development when doing so prima-rily benefits a private entity, and a number of states have adopted themeasures.83

II. GOVERNMENT AND PROPERTY

Overlooked in all the furor over Kelois the stark logic supporting theCourts position. The government has many powers that affect property,and in the post-New Deal world, these powers may be exercised without

significant judicial oversight.84

It is difficult to identify a characteristic ofeminent domain that warrants treating differently this power fromamong all government economic powers. Indeed, as we show, the othereconomic powers are far more menacing to private property rights.Thus, it is perfectly sensible that in Kelo, as in all post-New Deal public usecases, the Court has refused to draw a sharp line between the permissiblepublic uses that may motivate the power of eminent domain, on the onehand, and the permissible motives for exercising the states police pow-ers, on the other hand.

Admittedly, only with eminent domain may the state formally reas-sign ownership from a private citizen to the government. However, thegovernment may indirectly accomplish the same objective under at leasttwo alternative powersits power to tax and its power to regulate prop-erty, including the power to define property.

Importantly, the government is required to pay compensation to theprivate property owner only when its action is classified as a taking. Oth-erwiseinsofar as the Constitution is concernedthe property ownermust simply bear the cost. Thus, from the vantage point of private prop-

erty owners, eminent domain is preferable to both taxation and regula-tion, as it offers them compensation for the taken property. This fact isreflected by property rights advocates embrace of doctrines of regulatorytakings and an attendant surfeit of inverse condemnation actions.85

In this Part, we examine the various government powers and demon-strate that they can reach functionally equivalent results. As a result, weshow that doctrines adjusting the powers of the government in eminentdomain cannot operate in a vacuum; there is a constant interplay be-tween the various government powers. Forbidding the exercise of emi-

81. H.R. 4128, 109th Cong. (2005); see also H.R. 3135, 109th Cong. (2005), which has136 cosponsors.

82. S. 1895, 109th Cong. (2005).83. See Natl Conference of State Legislatures, supra note 27.84. See infra Part II.A.85. See, e.g., Castle Coal., Citizens Fighting Eminent Domain Abuse, at http://www.

castlecoalition.org/ (last visited Aug. 14, 2006) (on file with the Columbia Law Review)(collecting litigation stories).


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nent domain under specified conditionssuch as when seized propertyis subsequently to be put to private usedoes not prevent governmentseizure; it only prevents seizure under eminent domain. In light of this

fact, seizure by eminent domain represents the best scenario for affectedproperty owners, since such seizure comes with guaranteed market-valuecompensation.

A. The Regulatory Powers

Especially in the post-New Deal world, the government has vast regu-latory powers regarding property.86 The government constantly createsand refines legal property rights, recognizing new rights, abolishing old

ones, and modifying the scope and strength of existing rights.87 Modifi-cation of property is achieved through a number of government powers.States often act under their police powerstheir residual authority as sov-ereigns, permitting them to act almost without limitation in the interestsof public welfare, safety, or morals.88 The federal government cannotaccess these residual powers, but it too has vast powers regarding prop-erty, such as its powers to regulate commerce,89 to create and protectintellectual property rights,90 and to engage in the common defense.91

Indeed, the scope of government powers in the regulation of property is

so broad that it is extremely rare that the formal power justifying a prop-erty regulation is even explicitly invoked, let alone questioned.

There were periods in American history during which the states eco-nomic powers were seen to be more restricted than they are today. His-torians have argued over the nature of property regulation in the early

86. See, e.g., Carol M. Rose, Property Rights, Regulatory Regimes and the NewTakings JurisprudenceAn Evolutionary Approach, 57 Tenn. L. Rev. 577, 580 (1990)(explaining that Supreme Court decisions in Village of Euclid, Ohio v. Ambler Realty Co.,272 U.S. 365 (1926), and United States v. Carolene Products Co., 304 U.S. 144 (1938),established that property rights were poor relations in the world of rights and, as such,much more subject to governmental intrusion than the rights that more directly safeguardpolitical liberty and equality to insulated minority groups); Cass R. Sunstein, InterpretingStatutes in the Regulatory State, 103 Harv. L. Rev. 405, 473 (1989) (In the aftermath ofthe New Deal reformation, courts have been reluctant to use the Constitutions explicitprotection of property and contracts in a way that would seriously interfere with social andeconomic regulation.).

87. See generally Abraham Bell & Gideon Parchomovsky, Of Property andFederalism, 115 Yale L.J. 72 (2005) [hereinafter Bell & Parchomovsky, Of Property]

(discussing creation and modification of property rights and regimes). For a discussionthat targets the takings context, see Stewart E. Sterk, The Federalist Dimension ofRegulatory Takings Jurisprudence, 114 Yale L.J. 203, 22226 (2004) (discussing howtakings laws differ among different states).

88. See D. Benjamin Barros, The Police Power and the Takings Clause, 58 U. MiamiL. Rev. 471, 498524 (2004).

89. U.S. Const. art I, 8, cl. 3.

90. Id. art I, 8, cl. 8.

91. Id. art I, 8, cls. 1016.


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years of the Republic;92 however, it is fairly clear that, at least as a politicalmatter, governments refrained from many of the invasive regulations thatcharacterize state relations to property today. Particularly during the end

of the nineteenth century and the early twentieth century, courts devel-oped a robust jurisprudence of the Contracts Clause and the Due ProcessClauses, as well as a narrow interpretation of the Commerce Clause, thathad the effect of barring many types of economic regulations. Indeed,many scholars refer to this period as the Lochner Age,93 in reference tothe Supreme Courts decision in Lochner v. New Yorkthat laws setting themaximum number of working hours in bakeries unconstitutionally inter-fered with freedom of contract.94

The first half of the twentieth century witnessed a dramatic growth in

judicial deference to economic judgments by the political branches ofgovernment, particularly in the wake of President Franklin Rooseveltsdeclared plan to pack the Supreme Court with justices sympathetic to hisNew Deal economic policies.95 Five years after Roosevelts Court-packingscheme, the Court essentially erased all restrictions on the exercise offederal Commerce Clause power.96 Courts no longer accept arguments

92. See, e.g., Morton J. Horwitz, The Transformation of American Law 17801860, at31 (1977) (arguing that in eighteenth century property rights were absolute); BernardSchwartz, A Commentary on the Constitution of the United States, Part II: The Rights ofProperty 231 (1965) (claiming that before industrialization owners were free to developtheir land without control by others); James W. Ely, Jr., The Enigmatic Place of PropertyRights in Modern Constitutional Thought, inThe Bill of Rights in Modern America After200 Years 87, 93 (David J. Bodenhamer & James W. Ely, Jr. eds., 1993) (Historicallylandowners could use their property for any lawful purpose, restrained only by thecommon-law prohibition against creating a nuisance.); John F. Hart, Colonial Land UseLaw and Its Significance for Modern Takings Doctrine, 109 Harv. L. Rev. 1252, 1253(1996) ([C]olonial governments regulated land use extensively for purposes other thanpreventing harm.); John F. Hart, Land Use Law in the Early Republic and the Original

Meaning of the Takings Clause, 94 Nw. U. L. Rev. 1099, 110731 (2000) (discussingAmerican land use restrictions from 1776 to 1789 that were not concerned with securinghealth, safety, or property).

93. See, e.g., Bruce Ackerman, We the People: Transformations 269 (1998); Cass R.Sunstein, Lochners Legacy, 87 Colum. L. Rev. 873, 874 (1987).

94. 198 U.S. 45 (1905).

95. See Joseph Alsop & Turner Catledge, The 168 Days: A Study of Judicial Review asan Instrument of Popular Government 14147 (1938); Edward S. Corwin, Court overConstitution 127 (1957); Benjamin F. Wright, The Growth of American Constitutional Law20002 (1942) (detailing Roosevelts Court-packing plan).

96. See Wickard v. Filburn, 317 U.S. 111, 12425 (1942) (extending federalcommerce power to small-scale intrastate activities that may affect interstate commercewhen considered cumulatively). In recent years, the Supreme Court has begun to cut backagain on the Commerce Clause power. See, e.g., United States v. Morrison, 529 U.S. 598,613 (2000) (Gender-motivated crimes of violence are not, in any sense of the phrase,economic activity.); United States v. Lopez, 514 U.S. 549, 558 (1995) (limiting activitiesCongress may regulate under Commerce Clause to three defined categories). But seeGonzales v. Raich, 125 S. Ct. 2195, 2209 (2005) (holding that Commerce Clause allowsfederal prohibition of locally grown medical marijuana, based on cumulative effectsreasoning ofWickard).


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that economic legislation or regulation should be struck down for violat-ing the Contracts Clause, the Equal Protection Clause, or the SubstantiveDue Process Clauses.97 Together with the birth of the administrative

state,98

these developments created a new regulatory environment inwhich valuable property rights are routinely restricted and eliminated.

Consider just some of the common regulations of property.The advent and popularity of zoning has led to an extensive land use

law that prescribes in very restrictive terms the bounds within which realtymay be used. Zoning laws commonly permit only certain kinds of uses ofproperty. They determine the permissible physical shapes of buildingsand other structures, height and setback, architectural style, constructionmaterials, their number of inhabitants or residents, and whether com-

mercial services may be offered.99 Together with safety regulations andbuilding licensing, zoning laws cover nearly every facet of activity and useof realty and fixtures.

In addition, state governments define the nature and scope of own-ership in land and chattels.100 The government recognizes or refuses torecognize the various estates in land,101 describes the scope of theowners right to exclude,102 to alienate and restrict alienation,103 and totransfer by gift or devise.104 New quasi-property rightssuch as a right toones likeness105are created, and otherssuch as rights in genetic

97. See James W. Ely, Jr., The Guardian of Every Other Right: A ConstitutionalHistory of Property Rights 12634 (2d ed. 1998) (describing Courts shift in 1937 toexamine economic regulations with extreme deference); William E. Leuchtenburg, TheSupreme Court Reborn: The Constitutional Revolution in the Age of Roosevelt 21336(1995) (same); Bernard Schwartz, Powers of the President: The Rights of Property 28485(1963) (describing shift in Contract Clause interpretation by courts).

98. For an excellent discussion of the rise of the administrative state and thecorresponding corrosive effect it had on property rights, see Edward L. Rubin, BeyondCamelot: Rethinking Politics and Law for the Modern State 296300 (2005).

99. See generally Georgette C. Poindexter, Light, Air, or Manhattanization?:Communal Aesthetics in Zoning Central City Real Estate Development, 78 B.U. L. Rev.445, 44748 (1998) (describing transformation in zoning laws to take into accountcommunitys views on aesthetics).

100. See Bell & Parchomovsky, Of Property, supra note 87, at 7477.101. An oft-cited example is the abolition of the fee tail estate in the United States.

See, e.g., Robert Hockett, Whose Ownership? Which Society?, 27 Cardozo L. Rev. 1, 11(2005) (One of the first American changes to the English common law was the abolitionof fee tail and primogeniture, this with a view to broadening the incidence of freeholdingacross the population.).

102. See infra notes 109112 and accompanying text.103. See, e.g., Restatement (Second) of Prop.: Donative Transfers 4.14.5 (1983)

(outlining valid and invalid types of restraints on alienation).104. See Ray Andrews Brown, The Law of Personal Property 7.17.21, at 76153

(Walter B. Raushenbush ed., 3d ed. 1975) (discussing law of gifts of chattel).105. See, e.g., State ex rel. Elvis Presley Intl Meml Found. v. Crowell, 733 S.W.2d 89,

99 (Tenn. Ct. App. 1987) (holding that under Tennessee law celebrities have descendibleright of publicity upon their death); Alexander Margolies, Sports Figures Right ofPublicity, 1 Sports Law. J. 359, 359 (1994) (describing property right one holds in onesown identity as relatively recent development).


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materials106denied. States have reallocated property rights amongneighbors by changing rules in nuisance law regarding permissible landuses.107 Similarly, states have transferred property rights from lessors to

lessees by means of leasehold regulations.108

The result is that many of the prerogatives ordinarily associated withownership may, in fact, be exercised by the government at any time. Tra-ditionally, the right to exclude is considered the centerpiece of owner-ship rights; owners of realty generally may decide who may enter upontheir land and what they may do while present.109 However, the govern-ment may replace the owners judgment and allow people to enter not-

withstanding the owners wishes to the contrary, such as aid workers inprivate organizations,110 cable company workers,111 or students handing

out pamphlets in a mall.112 The government may bar uses above a cer-tain height, or underground, effectively seizing the air and subsurfacerights associated with realty ownership. The government may take awaythe ability to use property in the fashion intended by the owner. It mayforce owners to design property in a fashion favored by the government.

It is no secret that regulation, therefore, functionally gives the gov-ernment the power to take property just as it might through eminentdomain. This realization has created one of the most prolific sources of

judicial vexation:113 the regulatory takings doctrine, which establishes

that government regulations that go too far are subject to the same con-stitutional limitations as government exercises of the power of eminentdomain. A series of cases in recent decades has established a handful ofdifficult-to-apply rules for determining which regulations go too far: Reg-ulations are considered takings when they permanently eliminate all pro-ductive economic use of property,114 impose permanent physical inva-sions upon real property,115 or impose an excessive economic impact on

106. See, e.g., Moore v. Regents of the Univ. of Cal., 793 P.2d 479, 493 (Cal. 1990).

107. See, e.g., Boomer v. Atl. Cement Co., 257 N.E.2d 870, 87375 (N.Y. 1970).108. See, e.g., Lingle v. Chevron U.S.A., Inc., 125 S. Ct. 2074, 208485 (2005)

(discussing whether rent control law constitutes a taking); Yee v. City of Escondido, 503U.S. 519, 52632 (1992) (same).

109. See Thomas W. Merrill, Property and the Right to Exclude, 77 Neb. L. Rev. 730,747 (1998) ([W]here the law recognizes a right to property, it confers a right toexclude.).

110. E.g., State v. Shack, 277 A.2d 369 (N.J. 1971) (permitting members oforganization to visit and aid migrant farmworkers on private property without ownersconsent).

111. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982).112. PruneYard Shopping Ctr. v. Robins, 447 U.S. 74 (1980).113. We eschew the traditional string cite demonstrating the incoherence of the

Supreme Courts regulatory takings jurisprudence, and instead direct the reader to thesources cited in Abraham Bell, Not Just Compensation, 13 J. Contemp. Legal Issues 29,3940 & n.49 (2003).

114. Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1019 (1992); see also Tahoe-SierraPres. Council, Inc. v. Tahoe Regl Planning Agency, 535 U.S. 302, 330 (2002) (notingcontinued validity ofLucas).

115. Loretto, 458 U.S. at 426.


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property in light of the owners reasonable investment-backed expecta-tions and the nature of the government action.116 In addition, a regula-tion is considered a taking when it requires that an owner surrender title

to a property interest as a condition for a government benefit unlessthere is an essential nexus between the condition and the benefit,117 andrough proportionality between the property surrendered and the impactof the proposed development.118

Yet, even with these limitations on its regulatory power, the govern-ment may still functionally take without formally invoking the power ofeminent domain or risking a judicial declaration of a regulatory taking.Thus, for example, New York could effectively seize the air rights overGrand Central Station under its Landmarks Preservation Law without

compensation because it did not invoke the power of eminent domain.119California could similarly strip shopping mall owners of the right to ex-clude protesters without compensation.120 The Tahoe Regional Planning

Agency could strip regional property owners of all building rights of anykind for over two years.121 The state of Delaware could essentially seize apermanent easement for a buffer zone alongside a highway without com-pensation.122 Other examples abound. In short, the government mayoften seize property without compensation, so long as it refrains from aformal designation of the exercise of eminent domain and steers clear of

the handful of clear regulatory takings tests.

B. The Taxing Power

In addition to their regulatory powers, state, federal, and local gov-ernments have the ability to tax properties to raise revenue. Generally, inthe United States, realty taxes are assessed at the local level.123 However,

116. See Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124 (1978)(articulating factors determining a taking).

117. Nollan v. Cal. Coastal Commn, 483 U.S. 825, 837 (1987).

118. See Dolan v. City of Tigard, 512 U.S. 374, 391 (1994) (No precise mathematicalcalculation is required, but the city must make some sort of individualized determinationthat the required dedication is related both in nature and extent to the impact of theproposed development.).

119. See Penn Cent., 438 U.S. at 138 (holding that New Yorks action did notconstitute a taking).

120. See PruneYard Shopping Ctr. v. Robins, 447 U.S. 74, 84 (1980) (holding thatCalifornias action did not constitute a taking).

121. Tahoe-Sierra Pres. Council, Inc. v. Tahoe Regl Planning Agency, 535 U.S. 302,34243 (2002).

122. Booker v. State ex rel. Secy of Dept of Transp., 642 A.2d 836 (Del. 1994)(unpublished table decision).

123. See generally William A. Fischel, The Homevoter Hypothesis: How Home ValuesInfluence Local Government Taxation, School Finance, and Land-Use Policies (2001)(describing property tax as mainstay of local government).


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various state124 and federal125 taxes are assessed on property transactionsand affect property values.

Theorists have long observed the ability of the government to affect

property values and even seize title to private property by using the taxingpower.126 William Stoebuck has even asserted that the taxing power isnot merely similar to eminent domain; it is the same, as far as the poweritself goes.127 The power to tax enables the government to seize nearlyall property value either directly by taxing the property interest or indi-rectly by taxing its transfer, its complements, or various other items thatmay affect property value. In the rare instances of in-kind taxation, thegovernment may even directly seize title to the taxed property.128

As should be evident, the taxing power may often be interchanged with the regulatory powers or eminent domain.129 Consider, for in-stance, the following three cases, which use different government powersto achieve the same result. In the first instance, the government uses itspower of eminent domain to seize a use right over a small strip of a lotthat abuts a stream and imposes a conservation easement. In the secondinstance, using its regulatory powers, the government forbids all noncon-servational use of the small strip abutting the stream. In the third case,the government taxes lots abutting the stream at the value of the usescarried out within the small abutting strip.

Interestingly, while the courts have developed a massive regulatorytakings jurisprudence to regulate the governments choice among theregulatory powers and eminent domain, the courts have paid little atten-tion to the boundary between taxings and other government powers totake. As Eduardo Penalver recently wrote, [o]ne of the abiding puzzlesof the Supreme Courts Takings Clause jurisprudence is the obvious ten-sion between the rigor with which the Court scrutinizes regulations ofproperty under the Takings Clause and the enormous deference it dis-

124. See, e.g., N.D. Cent. Code 57-05-01 to -11 (2005) (assessing statewide propertytax on railroad property).

125. The capital gains tax on gain or loss of disposition of property is assessedaccording to subtitle A, chapter 1, subchapter P of the Internal Revenue Code, 26 U.S.C. 12001298 (2000).

126. See Stephen R. Munzer, A Theory of Property 42022 (1990) ([T]here is notalways a clear line between taxes and takings.); Abraham Bell & Gideon Parchomovsky,Takings Reassessed, 87 Va. L. Rev. 277, 28485 (2001) (discussing governments ability totake property through its power to tax); Eduardo Penalver, Regulatory Taxings, 104

Colum. L. Rev. 2182, 218384 (2004) (noting similarities between takings and taxation);cf. Epstein, Takings, supra note 20, at 283305 (arguing that every government action thatdiminishes property valuewhether stemming from tax, eminent domain, or policepowersis a taking for which compensation is constitutionally mandated).

127. William B. Stoebuck, A General Theory of Eminent Domain, 47 Wash. L. Rev.553, 571 (1972).

128. See Penalver, supra note 126, at 220811 (discussing in-kind taxation).

129. See Richard A. Posner, Taxation by Regulation, 2 Bell J. Econ. & Mgmt. Sci. 22,23 (1971) (suggesting one function of regulation is to tax).


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plays toward the states exercise of its power to tax.130 In recognition ofthis contention, Saul Levmore has argued that every theory of takingslaw should explain or at least struggle with the question of why the power

to taxwithout compensation, of courseis not fundamentally inconsis-tent with the constitutional obligation to compensate condemnees.131

Richard Epstein, in fact, has suggested that many tax laws should be con-sidered unconstitutional uncompensated takings.132 Nevertheless, this isnot the viewpoint held by the courts. There is no doctrine of regulatorytaxings that treats purported exercises of the taxing power as takings for

which compensation must be paid. Absent a tax so arbitrary as to fall outof the category of taxation altogether, taxation is always able to avoid thecompensation requirement.133

C. Interplay Among Government Powers

Given the panoply of available powers, the government may nearlyalways reach the same result in multiple ways. As we discuss in Part III,any time a limitation is placed on only one of the several governmentpowers affecting property, the relative attractiveness of the powerschanges. However, even without any prompting from legal rules, the gov-ernment may find it advantageous to mix and match among its powers or

to use an unconventional power to achieve its aims. In this section, weconsider two examples that illustrate the governments ability both to useall its powers to achieve the same aims and to avoid compensation orlimitations on eminent domain where convenient. Specifically, we lookat two separate types of projects that are usually associated with a specificgovernment powerprotection of historic properties and landmarks, as-sociated with regulation, and urban redevelopment to combat blight, as-sociated with eminent domainand show that the government has muchmore flexibility than is generally acknowledged. We show that while pro-

tecting historic property can be legally accomplished by means ofuncompensated regulations, the government can and often does chooseto compensate affected owners. Conversely, while eminent domain to

130. Penalver, supra note 126, at 2183.131. Saul Levmore, Just Compensation and Just Politics, 22 Conn. L. Rev. 285, 292

(1990).132. Epstein, Takings, supra note 20, at 28384 (suggesting distinction between

takings and taxes rests upon a sleight of hand).133. See, e.g., Bruce Ackerman, Taxation and the Constitution, 99 Colum. L. Rev. 1, 3

(1999) ([T]here are no significant limits on the national governments taxing . . .powers . . . .); Boris I. Bittker, Constitutional Limits on the Taxing Power of the FederalGovernment, 41 Tax Law. 3, 4 (1987) (noting widespread view that federal tax power isvirtually immune to any constitutional restrictions); Leo P. Martinez, To Lay and CollectTaxes: The Constitutional Case for Progressive Taxation, 18 Yale L. & Poly Rev. 111, 128(1999) (The governments power to tax is essentially unlimited.); Penalver, supra note126, at 2198 (In contrast with its tendency to scrutinize regulations challenged under theTakings Clause, the Court has shied away from all but the most deferential constitutionalreview of tax provisions.).


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seize blighted properties requires compensation, we show that the gov-ernment can and does take many actions to reduce compensation. In-deed, we show that attempts to restrict eminent domain only to the most

downtrodden properties (through a doctrine of blight) cause the govern-ment to pay less compensation.

1. Landmarking. The government has been involved in protectinghistorically notable or valuable properties since the 1930s. Early effortsincluded the Historic Sites, Buildings, and Antiquities Act of 1935,134

which empowered the Secretary of the Interior to acquire historic proper-ties by gift, purchase, or otherwise, subject to proper appropriations byCongress,135 and the Antiquities Act of 1906,136 which protected historicsites on government land. Legislation of this type views protection of his-

torically valuable properties as a decision to be made by the owner. Thegovernment must acquire titleby purchase or other voluntary transferor, if need be, by eminent domainin order to protect the properties.Many more recent acts for protection of historically significant items, atboth the state and federal level, adopt this approach.

However, as the landmark takings case Penn Central makes clear,states have an alternative means of achieving the same goal. Rather thantaking title to the property it seeks to protect, the government may placerestrictive regulations upon the owner, requiring the owner to preservethe property in precisely the same manner that the government wouldhave were it the title holder. New Yorks Landmarks Preservation Law,examined in Penn Central, adopts this approach. It permits a commissionto designate private real properties as landmarks and neighborhoods ofprivately owned properties as historic districts. Once a building is so des-ignated, the owner may no longer make any alterations to the externalfacade of the building without obtaining a certificate of appropriateness.

As the power being exercised purports to be regulatory, rather than anapplication of the power of eminent domain, the government need payno compensation, although the law does include some regulatory bene-fits (in the form of transferable development rights) for owners of build-ings restricted by a designation as historic.137 The New York law was up-held in Penn Central, and no similar law has been held to work as aregulatory taking since.

Yet, despite the free hand they enjoy in historic preservation legisla-tion, governments still choose to compensate affected owners. Somestates, rather than restrict private property rights outright, have chosen to

offer tax benefits to properties that accept a landmark designation andwhose owners voluntarily agree to accept the attendant development re-

134. Act of Aug. 21, 1935, ch. 593, 49 Stat. 666 (codified as amended at 16 U.S.C. 461467 (2000)).

135. Id. 2(d).

136. Act of June 8, 1906, ch. 3060, 34 Stat. 225 (codified at 16 U.S.C. 431433).

137. Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 10815 (1978).


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strictions.138 Other states employ a combination of tactics. Landmarkinglegislation in these states uses both uncompensated regulation and trans-fer of property rights or prerogatives in order to achieve the goal of

preservation.2. Blight. Just as the government may voluntarily compensate even

when using its regulatory powers, the government may avoid compensa-tion even when acting in an area traditionally associated with eminentdomain. The takings doctrine associated with blight presents perhaps themost outstanding example of the governments ability to mix and matchamong its powers in order to evade the compensation requirements ofeminent domain. We consider two doctrinal aspects of blight. First, welook at the phenomenon of condemnation blight. Condemnation

blight is the lowering of property values that occurs when a set of proper-ties is designated for future taking by eminent domain as a result of theexpected inadequacies of market value compensation. Essentially, inthese cases, the government uses its powers to set policy, and other regu-latory powers, to drive down the compensation it will have to pay for itseventual exercise of the power of eminent domain. Second, we considerthe proposed doctrine that where taken property is to be given to subse-quent private ownership for private purposes, the taking lacks a publicuse unless the pretaking property was in a blighted condition. We

show that while the doctrine is supposed to help property owners by bar-ring takings except in extreme situations, the doctrine actually compelsthe government to create blight by use of its other powers and therebydrives down compensation. Legally, these two types of blight are unre-lated. Both, however, demonstrate the fluidity with which governmentcan maneuver among its powers in order to seize whatever property inter-ests it desires, at any compensation level, or at no compensation at all.

a. Condemnation Blight. We begin by examining condemnationblight. Generally, compensation is paid for the value of property as of the

day it is actually taken, rather than the day on which the taking was an-nounced. Not surprisingly, these values may differ greatly. Businesses

will not invest in a new property after the announcement of a taking, asthe value of any built-up goodwill will disappear on the day of the taking.Similarly, purchasers of residential properties looking for a stable long-term home will avoid the area. As Gideon Kanner has noted, the an-nouncement of a pending government taking often results in the precipi-tous decline of property values in the targeted neighborhood. Many salesare distress sales, where buyers are limited to those interested in short

term uses only.139 This phenomenon, known as planning blight orcondemnation blight, is the result of the impairment of marketability

138. See, e.g., Alaska Stat. 45.98.020 (2004) (granting loans); Fla. Stat. Ann. 196.1977 (West 1999) (providing property tax exemptions for improvements to historicproperties); N.M. Stat. Ann. 7-2-18.2 (West 1978) (offering tax credits).

139. See generally Gideon Kanner, Condemnation Blight: Just How Just Is JustCompensation?, 48 Notre Dame Law. 765 (1973).


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caused by the knowledge that any ownership interest in the property isshort-lived.140

While a handful of doctrines of takings compensationde facto tak-

ings,141 rolling back the date of measuring market value to the date thatthe government declared its intention to take,142 and the scope of theproject rule143have been proposed to deal with this lost value, none hasprovided a complete solution. Importantly, in Monongahela Navigation Co.v. United States, the United States Supreme Court ruled that the constitu-

140. See Robert H. Freilich, Planning Blight: The Anglo-American Experience, 29Urb. Law. vii, xixiv (1997). Freilich distinguishes between planning and condemnation

blight on the grounds that the latter is caused when condemnation is inevitableasopposed to the former, where condemnation is merely a possibility. Id. at xii.

141. A de facto taking occurs whenever the state excessively interferes with propertyrights without carrying out a declared seizure by eminent domain. The category of defacto takings is a broad one and includes regulatory takings, physical invasions, and denialof access. See 2A Patrick J. Rohan & Melvin A. Reskin, Nichols on Eminent Domain 6.01[15][a][d] (2006). Some courts have extended the concept to include particularlyegregious instances of condemnation blight. See, e.g., Foster v. City of Detroit, 254 F.Supp. 655, 66263 (E.D. Mich. 1966) (holding that city encouragement and aggravation ofexisting deterioration of land is a taking, despite lack of official eminent domainproceedings), affd, 405 F.2d 138 (6th Cir. 1968). Many cases, however, have refused to

find that a takings declaration amounts to a de facto taking, even where the declarationitself leads to loss of property value. See, e.g., Veillon v. Lafayette, 467 So. 2d 184, 18687(La. Ct. App. 1985) (holding that mayors and project agents declaration to homeownersthat their homes will be taken in order to facilitate transportation project does notconstitute a taking).

142. City of Buffalo v. J.W. Clement Co., 269 N.E.2d 895, 905 (N.Y. 1971) (findingthat property owner may introduce evidence of affirmative value-depressing acts bygovernment agency to increase valuation (quoting City of Buffalo v. George Irish PaperCo., 299 N.Y.S.2d 8, 14 (App. Div. 1969))); Lange v. State, 547 P.2d 282, 288 (Wash. 1976)(noting that valuation must be at earlier time than date of trial to achieve just

compensation). This doctrine produces results very similar to the de facto takingsdoctrine; the de facto takings doctrine moves back the date of the recognized taking, whilethe valuation rollback doctrine moves back the date of the valuation, while leaving therecognized takings date in place. Most states, however, agree that the correct valuationdate is the date of the taking, leaving compensation blight uncompensated. See 8A Rohan& Reskin, supra note 141, 18.04[1].

143. The rule posits that the state does not have to pay compensation for valuecreated by the government project prompting the taking. Thus, if a government projectraises the value of land to be taken for it, the government may discount from thecompensation award all increases attributable to the project. See, e.g., Almota FarmersElevator & Warehouse Co. v. United States, 409 U.S. 470, 47778 (1973) (The

government must pay just compensation [only] for those interests probably within thescope of the project from the time the Government was committed to it. (quoting UnitedStates v. Miller, 317 U.S. 369, 377 (1943))); Miller, 317 U.S. at 377 (holding thatrespondents were not entitled to compensation reflecting increase in land value arisingfrom likelihood of government seizure); City of Cleveland v. Carcione, 190 N.E.2d 52, 56(Ohio 1963) (recognizing this rule as well-established). The scope-of-the-project rulemay also be used by property owner compensation claimants to support the argument thatthe owner is entitled to payment for the diminution of value caused by the takingsannouncement. This, however, is not the usual application of the rule.


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tional requirement of just compensation does not include payment forcondemnation blight.144

The phenomenon of condemnation blight is particularly important

in light of the broader property powers of the government. The govern-ment can create condemnation blight not only by declaring its intent totake, but also by means of other declarations or actions. Governmentdecisions to locate a garbage incinerator in a certain area, to reduce de-

velopment rights under the local zoning plan, or to increase local prop-erty taxes, may all be expected to reduce property values. The govern-ment, in other words, may use many of the powers for which it does nothave to pay compensation in order to reduce the amount that will be paidin compensation when the government eventually decides to use its

power of eminent domain.b. Blight and Public Use. The malleability of property values and

their vulnerability to government actions short of eminent domain areparticularly important to the public use doctrine of blight.

Some states have adopted the narrow definition of public use sug-gested byKelo opponents and denied the state the right to take privateproperty for subsequent transfer to private individuals absent listed predi-cates. One of the most popular predicates is a blighted condition of thetaken property. This version of the public use doctrine generally forbidsthe government to use its eminent domain power where the property isdestined for post-taking private ownership, but carves out an exception

where the eminent domain is intended to alleviate blight.145 This view was adopted by Justice OConnor in her dissent in Kelo146 and by theMichigan Supreme Court in Hathcock.147 This approach permits exer-cises of eminent domain intended to eliminate the negative economiceffects resulting from harmful properties, but forbids the governmentto take nonblighted properties in order to encourage economic growth.The appeal of the position stems from the desire to block exercises ofeminent domain that do not produce public property, while leaving openthe possibility of using eminent domain as a tool for eliminating pocketsof poverty.

As might be imagined, the line separating blighted from regularproperty is not clear. To begin with, it is often very difficult to decide

when the government is clearing the path for economic growth by eradi-cating blight and when it is going beyond this and actively fostering eco-

144. 148 U.S. 312, 326 (1893).145. See, e.g., City of Las Vegas Downtown Redevelopment Agency v. Pappas, 76 P.3d

1, 11 (Nev. 2003); Yonkers Cmty. Dev. Agency v. Morris, 335 N.E.2d 327, 33031 (N.Y.1975); AAAA Enters., Inc. v. River Place Cmty. Urban Redevelopment Corp., 553 N.E.2d597, 600 (Ohio 1990); Charleston Urban Renewal Auth. v. Courtland Co., 509 S.E.2d 569,57778 (W. Va. 1998).

146. Kelo v. City of New London, 125 S. Ct. 2655, 2674 (2005) (OConnor, J.,dissenting).

147. County of Wayne v. Hathcock, 684 N.W.2d 765, 783 (Mich. 2004).


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nomic development. Furthermore, it is often difficult to understand whythe power of the government should be able to seize underutilizedproperties when their preseizure value is deemed to reflect disrepair,

but not when the underutilization stems from neglecting opportunities toimprove. Indeed, local redevelopment officials have seized on this weak-ness and successfully raised the specter of future blight in order toachieve redevelopment of not yet blighted areas that were arguably likelyto become blighted.148

But more importantly, blight is not exogenous to government poli-cies. That is, as the phenomenon of condemnation blight attests, the gov-ernment may always use its non-eminent domain powers to manipulateproperty values and cause properties to fall into disrepair. The govern-

ment can induce blight by compromising the quality of municipal services, such as education, sanitation, or policing. Alternatively, it canadopt new construction and zoning standards that would render certainproperties or even whole areas noncompliant. The government can alsosimply refrain from making the sort of zoning rule changes that wouldpermit the neighborhood to adapt to social and economic changes.

As with all other policy decisions affecting private property, the gov-ernments decisions on blight are ultimately made on grounds of politicalutility and may involve a mix of government powers.149 Kelo provides a

good example. The properties involved in Kelo were not designatedblighted by the City of New London, although they were situated in aneconomically distressed area with a residential vacancy rate of close totwenty percent.150 The properties, if not yet blighted, could well havebeen declared so in the near futurea point that was made by JusticeKennedy during the oral arguments, when he asked why it was necessaryto wait five or six years before were going to have blight.151

It is quite plausible, though not likely, that the City of New Londoncould have declared the properties litigated in Kelo blighted. However,

taking the properties for the purpose of blight removal meant that thecity would have to use its own budget to pay just compensation to the

148. See Jonathan M. Purver, Annotation, What Constitutes Blighted Area WithinUrban Renewal and Redevelopment Statutes, 45 A.L.R.3d 1096, 3 (1972). For anexample of legislation that specifically grants the government the power to preemptblight, see Mo. Ann. Stat. 99.805(3) (West 1998) (defining conservation area as not yeta blighted area but [one that] is detrimental to the public health, safety, morals, or welfareand may become a blighted area).

149. See infra Part III.150. Richard Brown, Eminent Domain: New Londons Story, 87 Pub. Mgmt. 7, 8

(2005), available at http://www.icma.org/upload/library/2005-12/%7B77D7298C-982B-4692-801A-61B06A4C8B7D%7D.pdf (on file with the Columbia Law Review) ([T]he FortTrumbull Municipal Development Area is situated in a commercial/industrial zone thathas performed poorly, with an 80 percent commercial vacancy rate and a 20 percentresidential vacancy rate.).

151. Bill Mears, CNN.com, Supreme Court Examines the Limits of Citys EminentDomain Power, Feb. 22, 2005, at http://www.cnn.com/2005/LAW/02/22/scotus.eminent.domain/ (on file with the Columbia Law Review).


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owners; taking the properties to achieve economic development enabledthe city to pass the compensation costs to the State of Connecticut, whichin turn established a special fund for supporting economic development

in its municipalities.In other words, the existence of a potential doctrine of blight would

not have appreciably altered the City of New Londons ability to seize theproperty in question. Through regulatory changes, the governmentcould always have driven the property values down enough to expose theproperties to seizure as blighted. Even had the government eschewedthis course, it could have designated properties as blighted and seizedthem using the power of eminent domain. Even a restricted view of thepublic use clause would not have derailed the New London project. The

truth was, and remains to this day, that political costs and benefits to therelevant government decisionmakers dictate the takings choice. Thus, itis politics, rather than legal restrictions, that ultimately blocked the tak-ings litigated in Kelo. It is, therefore, to these political considerations that

we turn in Part III.

D. The Political Model and State Constitutional Restrictions on PropertyRegulation

Our model is based upon the federal constitutional background out-lined in Part II. That is, we have presumed an essentially limitless govern-ment power to accomplish all goals by numerous powers, some compen-sated, some uncompensated. Many state constitutions impose tighterrestrictions on the regulatory or taxing powers.152 How does this affectthe analysis?

While the background restrictions on regulations or taxes obviouslyaffect the optimal rule of public use, they do not modify the essential

insight of our Essay that the public use rule should be set to match therules restricting other government powers. If, for instance, state law re-quires a more compelling rationale for state regulations of property thanmere nonarbitrariness (the federal standard), the same compelling ratio-nale should be demanded of exercises of the power of eminent domain.However, once the public use requirement becomes stricter than therules of state regulation or taxation, our analysis suggests that the likelyresult would be to encourage more uncompensated government actions.

152. See, e.g., Robins v. PruneYard Shopping Ctr., 592 P.2d 341, 347 (Cal. 1979)(denying property rights of owners of shopping mall to exclude political pamphleteers ongrounds of state constitutional expressive rights), affd, 447 U.S. 74 (1980); S. BurlingtonCounty NAACP v. Twp. of Mount Laurel, 336 A.2d 713, 73132 (N.J. 1974), appealdismissed and cert. denied, 423 U.S. 808 (1975) (requiring zoning for low-cost housingunder state constitutional law). See generally Anthony B. Sanders, The New JudicialFederalism Before Its Time: A Comprehensive Review of Economic Substantive DueProcess Under State Constitutional Law Since 1940 and the Reasons for Its Recent Decline,55 Am. U. L. Rev. 457 (2005) (reviewing historical record).


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This outcome is due to the fact that our model is based upon thereality that government may choose a variety of means to achieve thesame result. Once this variety of means is available, a narrowing of the

Public Use Clause serves only to alter the politi

Documents

The Usefulness of Public Use